Advice Req: $440k for 12 units producing $6450 / mo

[Hal Davis]

Any advice on how to best execute / finance this deal? My previous deals were cash purchases and a traditional mortgage. I have the cash to work this deal as described below, but would like to hear any advice from people with more experience with this kind of deal.

I currently have 3 SFR (3 bedrooms each, 1.5, 1.5, and 2 bath) and have an opportunity to purchase the following package:

5 duplexes, all 2 bed, 1 bath.  9 units rent for $550 and 1 rents for $475.  All together, they need $12,000 (one roof, some HVAC, etc).

2 SFR (both 2 bed, 1 bath in the same neighborhood as one of mine) that rent for $550 and $475. Combined they need $7,000 for HVAC.

The combined tax appraisal total for all properties is $470,342 and that seems low for the market values.

Total monthly revenue: $6,450.

Insurance for all properties is $2,700.

Property tax for all properties is $6,300.

If I can get the properties to appraise high enough, I could get the deal with little money down.

Assuming appraisal comes back at $480,000, 5.5% on a 15 year loan, $3,500 in closing costs, 6% for property management (using my current PM) I'm looking at $2,170 / month cash flow; $1,400 / month principal paydown; 43.7% CoC return; and 71.5% total return on $59,500 cash outlay.

In case you are wondering, I know the guy looking to sell.  His partner died and his son inherited his half and has been a challenge to work with so they are looking to liquidate.

Thanks in advance!